Calculate gross profit, margins and VAT due under the Margin Scheme or Standard VAT
Enter the purchase and sale details below. Results update instantly as you type.
Not sure which scheme applies? Read our comprehensive guide to the UK VAT Margin Scheme.
Your calculated profit, margins and VAT at a glance.
Purchase + Prep + Additional
£0.00
Selling price - all costs
£0.00
Gross profit / selling price
0.0%
Minimum selling price
£0.00
VAT is calculated as 1/6 of the margin between purchase price and selling price. Prep and additional costs cannot be deducted from the margin.
Selling price - purchase price
£0.00
1/6 of margin (£0.00)
£0.00
Gross profit - VAT due
£0.00
Standard VAT vs Margin Scheme
£0.00
| Margin Scheme | Standard VAT | |
|---|---|---|
| VAT due to HMRC | £0.00 | £0.00 |
| Net profit after VAT | £0.00 | £0.00 |
| Customer pays | £0.00 | £0.00 |
| Customer can reclaim VAT? | No | Yes (£0.00) |
The VAT margin scheme allows registered used car dealers in the UK to pay VAT only on the profit margin (the difference between the purchase price and the selling price) rather than on the full selling price. VAT is calculated as 1/6 of the profit margin. This scheme applies when vehicles are purchased from private individuals, or from other margin scheme sellers where no VAT was reclaimed on the original purchase. Read our comprehensive guide to the UK VAT Margin Scheme for full details.
Standard VAT is used for qualifying cars — vehicles purchased from VAT-registered businesses where VAT was charged on the full price. It is also preferred for business-to-business (B2B) sales, as the buyer can reclaim the 20% VAT. Under the Margin Scheme, no VAT is shown on the invoice and the buyer cannot reclaim anything, which can make the car more expensive for VAT-registered buyers.
Subtract all costs (purchase price, preparation, reconditioning, MOT, service and parts) from the selling price to get the gross profit. Divide the gross profit by the selling price and multiply by 100 for the margin percentage. Then deduct the VAT due under your chosen scheme for the true net profit figure.
Include the purchase price, preparation and reconditioning costs (valeting, bodywork, alloy refurbishment), and mechanical costs (MOT, servicing, parts, tyres). Note that under the VAT Margin Scheme, you cannot deduct prep costs from the margin before calculating VAT — VAT is always calculated on the difference between the purchase price and the selling price only.
Track purchase costs, preparation spend, profit margins and VAT calculations automatically across your entire stock. Supports both Margin Scheme and Standard VAT with branded invoicing.
